Brazil’s Congress has moved forward with a broad fiscal package that reduces federal tax benefits while increasing taxes on betting operators, fintechs, and selected financial activities. The bill, approved by both chambers within a short time frame, now awaits a final decision from the president, who will determine whether the measures are enacted as law.

The Senate approved the proposal late Wednesday, December 17, by a margin of 62 votes to six, following earlier approval by the Chamber of Deputies in the early hours of the same day. Formally registered as PLP 128/2025, the bill introduces a 10% reduction in federal tax incentives across multiple sectors and establishes a phased increase in taxation on online betting companies. Most provisions are scheduled to take effect from January 1, 2026, subject to constitutional waiting periods for new or increased taxes.

Senate Vote and Fiscal Rationale

The bill’s rapporteur in the Senate, Randolfe Rodrigues, who also serves as the government’s leader in Congress, supported the measure as a tool for reassessing long-standing tax incentives. He argued that such benefits require ongoing scrutiny to avoid reinforcing disparities. “This proposal, then, aims to reduce incentives, increase transparency and control over the amounts, move towards greater fiscal responsibility and, at the same time, combat distortions caused by the lack of evaluation of such measures [granting of incentives],” he stated during the debate.

Under the approved text, the reduction applies to incentives connected to several federal taxes, including PIS/Pasep, Cofins, IPI, IRPJ, CSLL, import tax, and employer social security contributions. The Executive Branch will retain discretion in how the reductions are applied, covering tax expenditures listed in the statement attached to the 2026 Budget Law and other special regimes, subject to defined exceptions.

The bill also modifies taxation under the presumed profit regime. Companies with annual gross revenue above R$ 5 million may see a 10% increase in the tax base used to calculate presumed profit, applied only to the portion exceeding that threshold.

Betting, Fintechs, and New Obligations

A central element of the proposal concerns betting operators. The tax rate on gross gaming revenue will rise from the current 12% to 13% in 2026, increase to 14% in 2027, and reach 15% in 2028. According to the text, half of the additional revenue will be directed to social security and the remainder to healthcare initiatives.

The bill also tightens oversight by introducing joint liability for taxes owed by unauthorized betting operators. Entities or individuals that advertise illegal betting platforms, as well as financial or payment institutions that continue to process transactions for unauthorized operators after formal notification, may be held jointly responsible for the applicable taxes.

Fintechs and capitalization companies will face higher rates of the Social Contribution on Net Profit. Their CSLL rate will increase from 15% to 17.5% through December 31, 2027, and then rise to 20% from 2028 onward. Other financial entities, including exchanges, settlement and clearing organizations, and administrators of organized over-the-counter markets, will also see incremental increases from 9% to 12% by the end of 2027 and to 15% from 2028.

The bill further raises the withholding income tax on interest on equity distributed to shareholders from 15% to 17.5%, starting in 2026. In the Chamber of Deputies, rapporteur Aguinaldo Ribeiro described the change as “measures to harmonize taxation” and estimated a R$ 2.5 billion impact from this adjustment.

Exceptions, Limits, and Political Debate

Several exemptions are written into the legislation. The reduction in tax benefits will not apply to constitutional immunities, such as those covering religious entities, political parties, and books. Other exclusions include benefits linked to the Manaus Free Trade Zone, Simples Nacional, basic food basket products, philanthropic entities, housing and education programs, payroll tax relief, and specific industrial policies for technology and semiconductors.

If the total value of tax incentives exceeds 2% of Brazil’s Gross Domestic Product, the bill restricts any further granting, expansion, or extension of such benefits unless compensatory measures accompany them. Government estimates place current tax benefits at roughly R$ 800 billion per year.

Debate in the Senate reflected differing views on the economic impact. Senator Efraim Filho said the linear reduction offered balance, stating that the approach “ended up being the measure that has the most balanced impact.” As stated on Senado Federsal’s website, Senator Tereza Cristina warned that cuts affecting agricultural inputs could place pressure on food prices, though she ultimately supported the bill, saying, “This is a mechanism that sustains productive efficiency and protects the purchasing power of the population.”

Opposition leader Rogério Marinho criticized the measure as a tax increase framed as social policy. Despite objections, the bill advanced and now moves to President Luiz Inácio Lula da Silva for approval. If signed into law, most provisions will apply from 2026, with betting operators benefiting briefly from a 90-day constitutional delay before higher rates take effect.